What are R&D tax credits?
Research and Development (R&D) tax credits are a government cash incentive designed to reward UK companies for investing in innovation. R&D tax credits are a valuable source of income for many companies that wish to develop their business.
According to HMRC, “Research and development take place when a project seeks to achieve an advance in science or technology through the resolution of scientific or technological uncertainty.”
Companies that invest money into developing new products, services and processes or enhancing existing ones, are eligible for benefits such as a cash payment, reduction of corporation tax or increase in taxable losses.
Would you like to know if your business qualifies?
Who can claim R&D tax credits?
Companies that spend money developing new products, processes, and services or enhancing existing ones, are eligible for R&D tax relief. If you’re spending money on business innovation, you can make an R&D tax credit claim.
Even if your development project is unsuccessful or shelved following the period of R&D, you can still claim on time you spent working on these projects.
If you are still unsure if your business is eligible to claim R&D tax credits, contact us today, for a no-obligation consultation with one of our knowledgeable and friendly advisors.
What is the R&D tax claims process?
Once it’s clear you are eligible to make an R&D tax credit claim, we will do all the hard work for you, by preparing your information for HMRC.
Our R&D tax specialists will claim for your two most recently-completed financial years. For example, if your financial yearend is the 31st December 2019, you can claim back R&D tax relief for the years ending 31st December 2017 and 31st December 2018.
How are R&D tax credits calculated?
R&D tax credits are calculated based on your businesses’ qualifying research and development spend. Qualifying expenditure is identified and enhanced through the relevant rate to produce your enhanced expenditure. This will give your company a cash credit if you were loss-making, a corporation tax reduction if you were profitable, or an amount based on a combination of the two.
HMRC tax credits benefit companies exponentially. The SME scheme has a rate of R&D expenditure tax relief of 230%, with the large company scheme at a rate of 130%. Through these schemes, you can improve your company’s financial strength, save money on your tax bill or reinvest into research and development projects in the future.